Bulls had something to cheer about to finish off last week’s trading in the Cattle markets after Thursday’s limit higher move followed by a $2-3 rally on Friday. However, the Friday afternoon USDA news was somewhat of a letdown, with the choice beef cutout coming in off $3.02 and the monthly COF (Cattle on Feed) report acknowledging larger supplies than were expected. In summary, March cattle placements were higher by 0.4% vs. last year, 5% above expectations, leaving the April 1 feed total unchanged vs. the previous year, which was also more than anticipated.
We continue to see more cattle move North, with Nebraska now taking over #1 in “on feed counts,” We continue to observe placement weights head higher as the industry attempts to put as much “cheap gain” on animals outside of feedlots. Placements <600# were down 14% vs. last year, 600-699# were down 5%, 700-799 down 4%, and >800# up 16%. These placement and on-feed totals came in higher than expected; however, they remain paltry in a historical view.
We would anticipate Cattle futures opening lower due to the news this morning, but it’s more critical technically where the trade ends up closing prices by session end. Volatility continues to rise, with values trading above all key moving averages in the June 15 Live contract. Chart structure has been improving, with Resistance coming in at 155.00 and support at 145.00. Keep your eyes on the cash trade later this week as a possible confirmation that this weaker seasonal trend is still in place.
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Cattle: June 15
